Reverse Questions

HECM Redmond Oregon – What The Heck Is A HECM?

April 19, 2018 /

What You Need To Be Aware Of Regarding Getting A HECM in Redmond Including, Options, Costs, Requirements and Finding The Best Deal

The HECM program helps elderly homeowners in Redmond Oregon to pull out some of the equity in their home in the form of monthly payments for life or a fixed term, or in a lump sum, or through a credit line. This reverse mortgage loan program allows families to stay in their home while using some of its equity. The total income that an owner will get from the program is the maximum claim amount, which is calculated with a formula including the age of the owner, the interest rate, and the value of the home. The borrower continues to be the owner of the home and may sell it and move at any time, keeping the sales proceeds that exceed the mortgage balance. No repayment is required until the borrower moves, sells, or dies.

How the HECM Program Works in Redmond OR

There are plenty of factors to consider before determining if acquiring a HECM loan in Redmond is best for you. To help in this process, you are required to meet with a HECM counselor to go over program eligibility standards, financial implications and alternatives to receiving a HECM reverse mortgage in Redmond and repaying the loan. Counselors will discuss provisions for the mortgage becoming due and payable. Upon the conclusion of HECM counseling, you should be able to make a completely independent, educated decision of whether this product will meet your particular needs. You can look online for a HECM counselor or call (800) 569-4287 toll-free.

There is borrower and Redmond property eligibility qualifications that must be met. You may use the list below to see if you qualify. Should you meet the eligibility criteria, you can complete a reverse mortgage application by contacting a FHA-approved lender. You can look online for a FHA-approved lender or ask the HECM counselor to provide you with a listing. The mortgage lender will discuss other qualifications of the HECM program, such as first year payment limitations, available payment options, the loan approval process, and repayment terms.

HECM Borrower Requirements For Seniors Living in Redmond OR

You must:

  • Be 62 years old or older
  • Own the house outright or paid-down a large amount
  • Occupy the house as your principal residence
  • Not be delinquent on any federal debt
  • Have financial resources to continue for making timely payment of ongoing property charges such as property taxes, insurance and Homeowner Association fees, etc.
  • Take part in a consumer information session given by a HUD- approved HECM counselor

Redmond Property Requirements with the HECM

The following eligible property types in Redmond will need to meet all FHA property standards and flood requirements:

  • Single family home or 2-4 unit home with one unit occupied by the borrower
  • HUD-approved condominium project
  • Manufactured home that satisfies FHA requirements

HECM Financial Requirements of Borrowers in Redmond OR

Income, assets, monthly cost of living, and credit profile will be verified. Timely payment of real estate taxes, hazard and flood insurance premiums will be confirmed

For adjustable interest rate mortgages, you’re able to select one of the following payment plans:

Tenure – equal monthly payments provided that no less than one borrower lives and continues to live in the property as a primary residence.
Term – equal monthly payments for a fixed period of months selected.
Line of Credit – unscheduled payments or in installments, at times and in an amount of your choosing up until credit line is exhausted.
Modified Tenure – combination of line of credit and scheduled monthly payments as long as you continue to live in the home.
Modified Term – combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.

For fixed interest rate mortgages, you will receive the Single Disbursement Lump Sum payment plan.

Mortgage Amounts Are Based On the Following

The amount you may borrow depends on:

  • Age of the youngest borrower or eligible non-borrowing spouse
  • Current interest rate; and Lesser of:
    appraised value;
    the HECM FHA mortgage limit of $679,650; or
    the sales price (only applicable to HECM for Purchase)

If there is more than one borrower and no eligible non-borrowing spouse, the age of the youngest borrower must be used to determine the amount you can borrow.

HECM Loan Costs

You can pay for almost all of the costs of a Redmond HECM by financing them and having them paid from your proceeds of the loan. Financing the costs means that you do not have to pay for them out of your pocket. However, financing the costs decreases the net loan amount available to you.

The HECM loan includes several fees and charges, this includes: 1) mortgage insurance premiums (initial and annual) 2) third party charges 3) origination fee 4) interest and 5) servicing fees. The lender will discuss which fees and charges are mandatory.

You will be charged an initial mortgage insurance premium (MIP) at closing. The initial MIP will be 2%. Over the life of the loan, you will be charged an annual MIP that equals 0.5% of the outstanding mortgage balance.

Mortgage Insurance Premium
You will incur a cost for FHA mortgage insurance. The mortgage insurance guarantees that you’re going to get expected loan advances. You can finance the mortgage insurance premium (MIP) as part of your loan.

Third Party Charges
Closing costs from third parties can include an appraisal, title search and insurance, surveys, inspections, recording fees, mortgage taxes, credit checks and other fees.

Origination Fee
You will pay an origination fee to pay the financial institution for processing your HECM loan. A lender can charge the greater of $2,500 or 2% of the first $200,000 of your home’s value plus 1% of the amount over $200,000. HECM origination fees are capped at $6,000.

Servicing Fee
Loan companies in Redmond or their agents provide servicing throughout the life of the HECM. Servicing consists of sending you account statements, disbursing loan proceeds and making certain that you stay up with loan requirements including paying real estate taxes and hazard insurance premium. Lenders may charge a monthly servicing fee of no more than $30 if the loan has an annually adjusting interest rate or has a fixed interest rate. The lender may charge a monthly servicing fee of no more than $35 if the interest rate adjusts monthly. At loan closing, the lender sets aside the servicing fee and deducts the fee from your available funds. Each month the monthly servicing fee is added onto your loan balance. Lenders may also choose to include the servicing fee in the mortgage interest rate.

Shopping for a Home Equity Conversion Mortgage in Redmond OR

If you’re entertaining the idea of getting a HECM in Redmond, check around. Determine which type of reverse mortgage loan could be right for you. That may be determined by what you would like to do with the cash. Evaluate your options, terms, and fees from various HECM mortgage lenders in Redmond. Learn as much as you are able to about reverse mortgages before you speak to a counselor or mortgage company. And ask lots of questions to ensure a HECM will work for you – and that you’re receiving the right kind for you.

Here are some things to consider:

Are you wanting a reverse mortgage to pay for home repairs or property taxes? If so, find out if you qualify for any low-cost single purpose loans in your Redmond. Staff at the Redmond Area Agency on Aging may know about the programs in your Redmond. Find the closest agency on aging at eldercare.gov, or call 1-800-677-1116. Ask about “loan or grant programs for home repairs or improvements,” or “property tax deferral” or “property tax postponement” programs, and how to apply.

Are you living in a high value house? You may be qualified to borrow more money using a proprietary reverse mortgage. But the more you borrow, the higher the fees you will pay. Additionally you might think about a HECM loan. A HECM counselor or a lender in Redmond can help you compare these kinds of loans side by side, to see what you will get – along with what it costs.

Compare fees and rates. This bears repeating: check around and evaluate the costs of the HECM loans available to you in Redmond. While the mortgage insurance premium is normally the same amongst numerous lenders, nearly all loan costs – including origination fees, interest rates, closing costs, and servicing fees – range among financial institutions.

Understand total costs and loan repayment. Ask a counselor or lender to explain the Total Annual Loan Cost (TALC) rates: they show the projected annual average cost of a HECM, including all of the itemized costs. And, regardless of what kind of HECM you’re thinking of in Redmond, recognize all the reasons why your loan might have to be repaid prior to were planning on it.

What You Need To Know About HECM Loans in Redmond Oregon

If you get a HECM of any type, you receive a loan in which you borrow from the equity in your home. You retain the title to your home. Rather than pay monthly mortgage payments, though, you receive an advance on part of your home equity. The money you obtain usually is not taxable, and it normally will not affect your Social Security or Medicare benefits. Once the final surviving borrower dies, sells the home, or no longer lives in the house as a primary residence, the loan will have to be repaid. In certain situations, a non-borrowing spouse may be able to continue to live in the home. Below are a few facts to consider about home equity conversion mortgages in Redmond OR:

You will owe more over time. As you get money through the home equity conversion mortgage, interest is added onto the balance you owe each month. Which means the amount you owe grows as the interest on your loan accumulates over time.

Interest rates could adjust over time. Nearly all HECM’s have variable interest rates, that are linked with a financial index and change with the market. Variable rate loans tend to give you additional options on how you get your money through the HECM loan. Some reverse mortgages – mostly HECMs – offer fixed interest rates, but they also tend to require that you take your loan as a lump sum at closing. Usually, the amount you can borrow is lower than you have access to with a variable rate loan.

Interest is not tax deductible each year. Interest on reverse mortgages is not deductible on income tax returns – until the loan is paid off, either partially or in full.

You must pay other costs in connection with your home. In a HECM, you retain the title to your
Redmond home. This means you are responsible for property taxes, insurance, utilities, fuel, maintenance, and other expenses. And, if you don’t pay your property taxes, keep homeowner’s insurance, or maintain the home, the lender might require you to repay your loan. A financial assessment is mandatory when you apply for the mortgage. Because of this, your lender might demand a “set-aside” amount to pay your taxes and insurance during the loan. The “set-aside” reduces the amount of funds you can get in payments. You are still responsible for maintaining your home.

What happens to your spouse? With HECM loans, if you signed the loan paperwork and your spouse didn’t, in certain situations, your partner may continue to reside in the home even after you pass on if he or she pays taxes and insurance, and continues to maintain the property. However your spouse will stop getting money from the HECM, since he or she wasn’t part of the loan agreement.

What can you leave to your heirs? HECM’s may use up the equity in your home, which implies less assets for you and your beneficiaries. Most reverse mortgages have something called a “non-recourse” clause. This means that you, or your estate, can not owe more than the value of your home when the loan becomes due and the home is sold. With a HECM, generally, should you or your heirs need to pay off the loan and keep the home rather than sell it, you will not have to pay more than the appraised value of the home.

[ssplaces location=”Redmond Oregon” keyword=”Bank” limit=”10″]